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Efficiency vs. Effectiveness: How to Determine the Appropriate Focus

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Enhancing the perception of corporate recruiting as a strategic enterprise asset is crucial if companies are to develop true long-term competitive advantage. Unfortunately most advice to recruiting departments is to "hire cheaper and faster." Following this model, the recruiting department is measured in terms that reinforce its place as a tactical service, rather than as a strategic business asset.

In last month's article, Efficiency OR Effectiveness: How to Make Recruitment a Strategic Enterprise Asset, we explored the importance of differentiating corporate hiring needs according to the efficiency vs. effectiveness framework (see last month's article for more on the framework). This month, we'll first discuss how this framework can influence the perception of the recruiting department as a business asset, as opposed to a service group, and then how to apply this framework to individual requisitions.

Service vs. Business
Most administrative functions within an organization are treated as services. That is, their function is to provide services to internal customers. (In this context, we use the term services specifically to describe internal service departments or groups, not to describe an organization whose business is providing services instead of products.) Services are measured by customer satisfaction metrics: speed and quality of delivery against specific goals of the department's internal customers. Since quality is often a qualitative term, the real measure of a service group's effectiveness is customer satisfaction.

Executives, however, are much more concerned with the market's perception than with manufacturing's satisfaction with their recruiter, for example. This is why internal services are the first to be outsourced. Internal customer satisfaction is not a metric that affects stock price in a tangible way.

To an executive's ears, "service" almost always translates as "expenses." "Business" on the other hand almost always translates as "revenue." (This is why we continue to hammer home the importance of making corporate recruiting a strategic business asset, and not a strategic service.) Sales is an example of a business function. Business functions generate revenue and provide strategic advantage. A business function is measured in hard dollars, the ability to predictably grow revenue over time, or both.

Business functions are very rarely outsourced. Service functions very often are. Not surprisingly CEOs and other executives prefer to spend time on business functions rather than service functions. Service functions are generally considered tactical cost centers. Business functions are perceived as functions that drive the business.

Becoming a Business Function
Part of the trap that the recruiting function falls into is reinforcing the perception that it is a service function when in fact it is a business function. Recruiting should not measure its success by how happy its customers are, but instead by how much it contributes to both the top and bottom line. Analyzing requisitions according to the effectiveness vs. efficiency framework is the first step in changing the perception of your recruiting organization from that of a service function to a business function. Therefore our proposed metrics for determining whether to classify a requisition as efficiency- or effectiveness-focused are linked directly to business function measurements.

Determining the Focus of a Requisition:
Effectiveness or Efficiency
In last month's article we explored the differences between effectiveness-focused and efficiency-focused requisitions. Specifically: Efficiency is a measure of speed and cost. Efficiency says "Getting someone in here fast is more important than getting the right person in here later." Effectiveness is a measure of quality. Effectiveness says the opposite: "Getting the right person in here is more important than how fast they get here."

Effectiveness and efficiency are actually ways to measure the business needs of a requisition. Each business is different, and each position or opening within a business must be considered with an eye toward the needs of the enterprise. There is no one-size-fits-all approach to determining what category a requisition may fall into.

For each category on the next page we propose some questions that can be asked of the executives ultimately responsible for the P&L of the hiring manager's business line in order to clarify the needs of the position. (Notice we did not say "hiring manager." Hiring managers may not understand the direct business impact that a hire may have. It is important for recruiters to get a complete picture for each requisition, which may include talking to others within the organization.)

Timing

Question: "What is the business impact of not being able to hire this person within the time frame indicated on the requisition?"

Considerations: As we discussed in last month's article, the answer to this question is not always obvious. This measurement cannot be ascribed to the internal customer's (read: hiring manager's) level of distress. This will simply reinforce that the way recruiting gauges its own success is by the hiring manager's perceptions. Instead, the recruiter has to be willing to dig deeper to figure out whether there are more financially attractive ways to fill a position while the right person is being found. Flex workers, contingent workers, and overtime might all be preferable to hiring quickly but ineffectively.

Measurement: If it is quantitative and discernible, mark for effectiveness. If the impact is low or indefinable, mark for efficiency.

Business Result

Question: "What is the quantifiable business result of hiring someone who cannot meet the stated requirements of the position?"

Considerations: Most hiring managers believe that their open positions are "make-or-break" for the organization--that is, that they are effectiveness-based requisitions. When interviewing the hiring manager and other business leaders to determine the proper focus for the requisition (i.e., efficiency or effectiveness), it is vital that recruiters help hiring managers realistically evaluate the requirements of the position. Describing the potential fallout of inappropriate requirements--for example, the extra recruiter time and cost to the organization just to hire an employee who may end up disappointed with the scope of the duties anyway--is one way that recruiters can help educate hiring managers about the business impact of their recruiting decisions.

Measurement: If hiring someone who does not meet the stated requirements will have little effect on the financial goals of the business line, the requisition is efficiency-based. If the impact would be at the financial level, the requisition is effectiveness-based.

Brand Impact

Question: "Will the performance of the person filling this position have an identifiable impact on the business line's or enterprise's brand? Will their presence and appearance?"

Considerations: The difference between performance and presence is critical in understanding how any single person can affect the business line's or enterprise's brand identity. For example, a software engineer's effect on the brand is through performance: If his or her code is good, the customer is happy. Therefore, those who have worked with software engineers know that you rarely assess their manner of dress or personal hygiene in determining how the customer will feel about the product. On the other hand, a bank teller affects the customer's brand perception through his or her actions, dress, manner of speech . . . in other words, through presence and performance.

Measurement: If neither the hire's performance nor presence will have a discernible impact on the business line's or enterprise's brand, the requisition is efficiency-focused. If the impact is significant, the requisition is effectiveness-focused.

Visibility

Question: "Does this position have internal visibility? In other words, does this position support critical employees or otherwise affect the work environment of critical producers?"

Considerations: This issue is often overlooked. If there are one or two degrees of separation between this position and someone who is a critical producer for the organization, this position is also likely to be critical.

Measurement: If the position is disconnected from critical decision makers and producers (measured by the number of interactions this position is likely to have with such members of the enterprise), then the requisition is efficiency-focused. If there is a measurable connection, then it is effectiveness-based.

Difficulty

Question: "Will the lead time to hire for this position be long, or will the search be especially difficult or costly, by virtue of the skill, attribute, and interest profile of the ideal candidate?"

Considerations: This is always linked to the "Business Result" question. In other words, why would you want to burn the intellectual, human, and financial capital on a difficult search that won't yield much business impact? It is usually assumed that the difficulty of the search is in direct proportion to the significance of the business impact. This assumption is neither logical nor valid. The efforts the recruiter makes to identify the true business impact can yield business answers that the recruiter can then use to reframe the hiring manager's needs.

Measurement: Assuming that the business impact of the position in question justifies the cost of the search, if the position will take more time, capital, and energy than a typical search, then the requisition is effectiveness-based. If the real business impact is not apparent, then turn this into an efficiency-focused requisition and reframe the hiring manager's and organization's expectations.

Conclusion
Each position (and therefore its accompanying requisition) within an enterprise should be viewed as needing either an efficiency or effectiveness focus. This measure is crucial for reinforcing the enterprise's perception of corporate recruiting as a business function, rather than a service function. Linking each position to identifiable metrics considered critical to the enterprise's success (by executives and internal leaders) will demonstrate that the recruiting function is a strategic business asset. This status reduces the likelihood that recruiting will be outsourced en masse and damage the long-term competitiveness of the organization.

In the next article in the series we will explore the people, process, and systems needs of supporting efficiency and effectiveness recruiting.

Author Bio
Jeff Hunter is the founding partner of Hunter | Morgan Associates, a strategic consultancy that works with HR departments, IT departments, and software vendors to create new value propositions and operational possibilities in the enterprise software value chain through the development and implementation of innovative frameworks, methodologies, and strategies. Jeff Hunter has been a high-tech entrepreneur and strategic consultant since 1981.

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